Your Down Payment

Many people who would like to buy a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new home, but don't know how you should get together your down payment?

Slash the budget and build up savings. Look for ways you can trim your expenditures to save toward a down payment. There are bank programs in which a portion of your take-home pay is automatically transferred into a savings account each pay period. Some practical approaches to build up funds include moving into less expensive housing, and staying local for your vacation this year.

Work a second job and sell things you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the things you may be able to put up for sale. Multiple small things could add up to a fair amount at a garage or tag sale. You can also look into what your investments may bring if sold.

Borrow from retirement funds. Research the details of your particular plan. Some people get down payment money by withdrawing from Individual Retirement Accounts or pulling money out of 401(k) programs. Make sure you understand about any penalties, the effect this may have on taxes, and repayment obligation.

Request a generous gift from your family. First-time homebuyers are often fortunate enough to get down payment assistance from caring family members who are eager to help them get into their first home. Your family members may be pleased to help you reach the milestone of having your own home.

Research housing finance agencies. These agencies offer provisional mortgage loans for moderate and low income buyers, buyers interested in remodeling a home within a specific part of the city, and additional specific types of buyers as specified by each agency. Financing through a housing finance agency, you may receive a below market interest rate, down payment assistance and other incentives. These types of agencies can assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. The primary goal of non-profit housing finance agencies is build up home ownership in certain parts of the city.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who may not be able to qualify for a traditional loan on their own, by offering mortgage insurance to private lenders. Interest rates for an FHA mortgage usually feature the current interest rate, while the down payment for an FHA loan are below those of conventional loans. The required down payment can go as low as 3 percent while the closing costs might be packaged in the mortgage loan.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a low rate of interest, no down payment, and limited closing costs. Although the VA does not provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher rate on the loan financed by the seller.

No matter your strategy of pulling together your down payment, the thrill of living in your own home will be just as sweet!

Want to discuss down payment options? Call us at 407-834-3377.

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